Vince Cable's review found strong support for an end to quarterly reporting to stock markets. Photograph Andrew Wimming/Reuters

The duty on companies to report quarterly to the stock markets and its investors is likely to be abolished in a review sponsored by the business secretary, Vince Cable, as part of a wider agenda to create a more productive "long-termist" culture in UK business.

The review into the City's short-term outlook is a core tenet of a Liberal Democrat agenda to promote a more responsible and effective capitalism. The aim is to restore equity markets to what is seen as their role as the most efficient way of allocating capital for wealth creation.

The review is linked to a separate move due next month to curb exorbitant executive pay, including linking pay packages to a more long-term outlook. Nick Clegg, deputy prime minister, has signalled that he wants significant changes to the way in which boardroom pay is regulated.

The Kay review has been told that "long-term incentive pay packages" in practice frequently cover fewer than three years.

Cable would like the Kay review to recommend five or so clear proposals, rather than simply produce an academic treatise into a widely discussed subject. It will also examine the role of intermediary investors, shareholders' voting rights in company takeovers and why unlisted companies appear to have more patient investors.

In a sign that business and investors would like to see curbs on "quarterly capitalism", the CBI, the National Association of Pension Funds and the Investment Management Association have urged Kay to propose curbs to frequent reporting requirements. Relaxation of the rules is also being proposed by the EU.

The IMA told Kay: "US research highlights that quarterly reports encourage short-term thinking and discourage long-term investment on the basis they could impact quarterly performance. Over time, this erodes value creation and economic performance. UK public companies are required to issue two interim management statements, as well as half-year and full-year accounts. Whilst this is less onerous than quarterly reporting, we feared it was a step in this direction and we understand that a number of listed companies provide quarterly updates on performance.

"Provided companies are required to disclose promptly new developments, long-term investors do not need reports more frequently than every six months."

The CBI also told Kay: "Quarterly reporting is onerous and adds little value for most investors. Given that companies have an obligation to report significant issues to the market as they arise, six-monthly reporting is sufficient to make judgments on the performance of businesses."

The NAPF in its submission states: "There is a strong sense among our members that quarterly results reporting and trading updates bring excessive focus to the short term with little or no benefit for the long term investor".

The Institute of Directors in its submission cited research showing more than 75% of executives admitted to sacrificing added value to smooth out reported earnings and satisfy City analysts.

The Kay review is also looking at the role of agents and the difficulty in identifying company's shareholders.

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